Suppose that a market is descrive by the following supply and demand equations:

ID: 1135081 • Letter: S

Question

Suppose that a market is descrive by the following supply and demand equations: Qs=2p and Qd=240-P

The equilibrium price in this market is________ and the equilibrium quantity is______ units.

Suppose that a tax of T is placed on buyers, so the new demand equation is as follows:

Qd=240-(P+T)

The new equilibrium price is________ and the new equilibrium quantity is______ units.

The price recieved by sellers _______, thr price paid by buyers________and the quantity sold________.

Suppose that a market is descrive by the following supply and demand equations: Qs=2p and Qd=240-P

(A)

Equate demand and supply 2P = 240 – P. So 3P = 240.

P = 80.

put P = 80 into either equation gives Q = 160

The equilibrium price in this market is 80 and the equilibrium quantity is 160 units.

(b)

P is the price received by sellers and P +T is the price paid by buyers.

Equate demand and supply

2P = 240 (P+T). So 3P = 240 – T.

P = 80 –T/3. This is price received by sellers.

The buyers pay an additional tax on seller price

P +T = 80 + 2T/3.

So Quantity sold is Q = 2P =160 – 2T/3

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